Analysts hail the U.S. carmaker’s appointment of a Chinese executive as a wise choice to lead the turnaround of its troubled China operation.
In late January, Ford China CEO Jason Luo suddenly resigned, just five months after taking the newly created position. The company had released a lacklustre earnings report a week earlier, showing dwindling sales in China. CEO Jim Hackett expressed his dissatisfaction publicly. After accepting Luo’s resignation, the company was quick to assert that his reasons were personal and unrelated. Still, the optics were not good. A long and exhaustive CEO search followed.
On October 23, Ford announced the appointment of Anning Chen as the new CEO of Ford China, effective November 1. Chen is an industry veteran. A former Ford engineer, he was most recently CEO of Chery Automobile and Chairman of Chery Jaguar Land Rover in China. He will lead Ford China’s turnaround amidst a global restructuring focused on Asia-Pacific. Ford China will become a stand-alone business unit, with Chen reporting to Jim Farley, President of Global Markets. Along with the sales slump, he will have to address the lack of a popular SUV for the market, and tense relationships with Chinese joint venture partners.
An American national born in China, Chen has about 14 years’ experience working in the country. His predecessor was the first executive from mainland China to hold Ford’s top job there, and while that did not work out, Chen’s appointment reaffirms the company’s shift to Chinese management in the country. “Getting a local person in this role is a good move. This will likely give Ford a better understanding of the market,” said Bill Russo, head of Automobility Ltd, a Shanghai-based advisory.
Automotive industry insiders believe Chen will help Ford in the market, particularly in repairing its partnerships with Changan Automobile Group and Jiangling Motors Group, though success is not guaranteed. Jiangling Motors welcomed the appointment, saying, “We are very pleased to see that Ford is paying more and more attention to the Chinese market and better implementing its ‘In China, for China’ strategy,” a spokesman for the company said.
Other recent appointments have also brought in Chinese management: In May Ford named Henry Li, a former senior sales executive at Mercedes, as Vice President, Marketing and Sales in Greater China. Mao Jingbo, also a former Mercedes executive, became President, Lincoln Asia Pacific and China in July. Richard Chen became Vice President, Strategy and Partnership for Ford Greater China.
Ford’s vehicle sales fell 43% in September from a year earlier and are down 30% in the first nine months of the year, Reuters reports. By comparison, sales in the global automotive industry overall are up 1.5% for the year to date. Ford blames its weak China business on an aging model line-up. Executives also point to the combination of lower prices and falling sales, particularly in the crossover and SUV market. Third-quarter results, released on October 24, beat expectations, however. Profits were slightly higher, and Ford stuck to its targets for the year.